Loans from Cooperatives
Besides banks, the other major source of cheap credit in rural areas is the cooperative societies (or cooperatives). Members of a cooperative pool their resources for cooperation in certain areas. There are several types of cooperatives, namely:-
- Farmers cooperatives
- Weavers cooperatives
- Industrial workers cooperative
Let us take the example of Krishak Cooperative.
- Krishak Cooperative functions in a village not very far away from Sonpur.
- It has 2300 farmers as members.
- The Cooperative accepts deposits from its members.
- Using the deposit as collateral, the Cooperative obtains a large loan from the bank. The loan amount received from the bank is used as funds to provide loans to the members.
- Once the members repay the loans the amount is repaid to the bank and a fresh loan is taken from the bank.
- The Cooperative provides loans to its members for the purchase of agricultural implements, loans for cultivation and agricultural trade, fishery loans, loans for construction of houses and for a variety of other expenses.